How to Save Auto USA

Coming together is a beginning.
Keeping together is progress.
Working together is success.

By Dean Crutchfield

Start it up…

If there’s one thing we can symbolically learn from the spirited GM product chief, Bob Lutz and his 46-year career in the car industry and the intrepid Paypal entrepreneur Elon Musk’s 6 years heading up Tesla, it’s that America defined transportation and it can define it again.

Looking at the American Auto Industry as a brand, there is tremendous potential for its reinvention.

What makes us great fades with age. Everyone has an opinion about how to solve the problems of the Big Three US automakers. Everything from giving Detroit whatever it takes to survive through to merging GM and Chrysler or allowing GM to enter Chapter 11 and Chrysler to die; the prevailing recommendation is that Chapter 11 might give tremendous power to the federally-appointed auto task force that President Obama has created to ameliorate the negative impact on consumer confidence in the industry. All of these ideas are flawed, unstable and excessive.

Henry Ford said that if he had asked customers what they wanted they would have asked for a faster horse. Today we want better cars, faster, that fit the profile: good for planet, good for people and good for profit; green car madness, rules. The difference now is that the Big Three have finally, albeit late in the game, committed themselves to reducing greenhouse gases and increasing fuel economy. Chrysler increased its hybrid technology; Ford has announced its EcoBoost engine program and GM has spent a profligate sum on its Volt.

Even if the Big Three get concessions and rationalize their respective product portfolios, they all have lagging sales, high costs, legacy costs, an over abundance of dealerships, contractual commitments and some would say lethargic company management. The far bigger more potent issue is that with no abatement in sight for this destructive deleveraging recession, the credit strapped, over extended, saving short US driver has retrenched requiring an entirely different role for marketing and its approach.

In tough markets like these, both Bob Lutz and Elon Musk know the four building blocks of successful marketing and brand building: Image and Reputation, Product and Services Offer, Management Style and Manufacturing Culture, and the Capabilities of the Business. The difference lies in their respective approaches.

In 2001, Bob Lutz was brought into GM to “liven up its vehicles” and “is credited with improving the look and feel of its passenger cars.” The newer models were supported by enticing finance and attractive service agreements. Fortunately, one of the building blocks, ‘Management style and Manufacturing Culture,’ had already changed substantially from low trust to high trust production – enabled by the “stop the line” processes implemented in the last two decades of the 20th Century. All of this engendered more trust and sense of ownership by the workforce and productivity and product quality followed suit. The summiteers basked in the headlines and then out of the glare of bright lights and trumpets set about maintaining GM’s bloated product offer and building inefficient gas guzzling SUV’s.

This was when a gallon of prevention would have been worth more than 16 gallons of cure. It’s not just a money injection that’s needed, but an attitude injection to create an ambitious, audacious and imaginative response to the crisis: one that heralds the dawn of a new era and accelerates the need for Silicon Valley spontaneity.

Enter Elon Musk, a Silicon Valley veteran, billionaire and risk taker who has presented his vision of Tesla’s leadership role in the auto industry and its ‘Capabilities’ to propel the auto industry’s progress toward the adoption of electric vehicles by 5 to 10 years (with Government aid). In January, the company signed on to build battery packs for Daimler’s electric Smart cars. As Musk said, “The deal is likely to be the first in a series of strategic partnerships between Tesla and other auto manufacturers to engineer and produce electric cars.” Musk envisions that tomorrow’s cars need to obviate that “image led” trap. This doesn’t mean ugly; the cool image of the Tesla Roadster’s body shape, tires and gearing are aimed at high performance, but the full cycle charge and discharge efficiency of the Tesla Roadster is a whopping 86%!

These new types of clear and defined “good for planet” innovations spur the ‘Capabilities’ of the Big Three and should now drive the management style and manufacturing culture, the cars offered and the image made – not the traditional way of image first, towing (slowly) the three other building blocks forward.

Handing billions to the same auto bosses who got us into this mess might not solve the problems the auto industry faces; it’s not how many cuts you can make, its how many cuts you can take and still keep motoring forward. In that regard wage cuts, job cuts, plant closings, increased productivity and benefit cuts have been relentlessly pushed on hardworking autoworkers.

For spontaneity to work, we need to focus on ‘Capabilities’ and fix some broken windows in Detroit. The current prevailing mindset is fearful, lacks confidence and results in breeding withdrawal and despair; we forget the prosperity of the past and ignore our ability to shape the future.

That is why we need to build urgency, not fear, into the community system. We can start to replenish the ‘Capabilities’ of the Big Three, by establishing properly funded “spontaneous” groups of influential and interested venture capitalists, engineers, designers and autoworkers nationwide to engage in positive discussions on how to advance transportation. These non-partisan groups sole agenda will be the restoration of a positive outlook by sharing technology and generating smart business and product ideas that can be immediately funded and acted upon.

To extricate motor-city from external combustion it needs internal combustion similar to what drove Silicon Valley to lead the world in new technology via generating informal social networks and spontaneously organized workplaces; not stepping on the brakes, strangling R&D and merely focusing on lower emission technologies. This may at first seem like an empty tank of gas and an antithesis to the cooperation and coopetition that prevails within the auto industry, but without wishing to sound Panglossian, there’s much we can learn (and use) from the success of Silicon Valley. The number of firms was abundant, hungry for talent, nimble, cutthroat with a high propensity for individualistic entrepreneurialism. On the surface Silicon Valley looked like the law of the jungle prevailed, but making it really happen was the existence of a wide array of informal social networks thriving underneath the chaos pushing technological breakthroughs, building ambitions and boosting the ‘Capabilities’ of every business.

The importance of informal social networks is very similar to the early days of the car industry where there were literally hundreds of carmakers that survived or died through market forces. So you’ll be pleased to learn today that if you take a quick peek under the hood you’ll find hundreds of future facing car making companies, many with quality products from Aptera to Tesla.

Silicon Valley showcases that informal social networks are key for technological development and the Big Three have what’s needed; in the first place there is a very strong sense of culture and urgency. Management knows that formal and informal social networks have always been highly effective with the latter helping the former. And the unions also have the infrastructure, the talent, networks of communications, newspapers and magazines, trained and paid staffs and press departments to start to make this happen.

To break the frame, the combined forces of the powerful United Auto Workers (UAW) rank and file and the Motor and Equipment Manufacturers Association (MEMA) must put forward their own programs for creating and building informal networks across their membership base and intervene independently in the current crisis. Tapping demand for government funds to rebuild and retool the plants to make energy-efficient cars could rally wide support if it can be shown to be ‘shovel ready’.

The fate of the Motor City captivates our hearts and minds because it speaks to our future. The car industry transcends national boundaries, so by engaging the workforce we can engage the nation and the world to make one thing for certain: General Motors, Ford and Chrysler can be great again. As Henry Ford said:

Coming together is a beginning.
Keeping together is progress.
Working together is success.